Cutting the cost of workplace disputes

Not only do workplace disputes result in unhappy and unproductive employees, they also take up management time and can lead to high staff turnover and the possibility of tribunal claims if not handled well.

The Advisory, Conciliation and Arbitration Service, better known as ACAS, has recently commissioned a study into the cost of conflicts in the workplace, not only in financial terms but also the impact on employee wellbeing and performance. The report, prepared by Professor Richard Saundry of the University of Sheffield Management School and Professor Peter Urwin of the Centre for Employment Research at the University of Westminster, suggests that the cost of dealing with conflict in the workplace is £28.5 billion annually, more than £1,000 for every employee in the workplace, rising to almost £3,000 for each employee involved in conflict.

Data from The Chartered Institute of Personnel and Development at the end of 2019 suggests that almost 900,000 employees took time off as a result of workplace conflict, nearly half a million resigned and more than 300,000 were dismissed.

Early intervention is recognised as being crucial in resolving conflict before employees take more formal action, whether that be by raising a grievance or bringing a tribunal claim against their employer. Research from the study suggests that on average, 374,760 grievances are lodged each year, with the cost of management time being £951 per grievance. A grievance may be raised by an employee who has concerns about a colleague’s behaviour or is unhappy with a decision made by their employer, for instance to put them on a Performance Improvement Plan. As a result of the Covid-19 pandemic more employees than ever are now raising concerns about health and safety, and employers should ensure they take any concerns seriously as any detrimental treatment (or dismissal) on the grounds that an employee has raised concerns could amount to a protected disclosure for the purposes of whistleblowing legislation.

Conflict in the workplace can also result in disciplinary proceedings if an employee reports bullying, harassment or discrimination at the hands of a fellow employee or manager, resulting in the need for an independent investigation which may lead to a disciplinary hearing, possible dismissal and an appeal process, all of which take up management time thereby incurring additional cost.

Research suggests that over 5 million employees annually report experiencing stress, anxiety or depression as a result of conflict in the workplace. Disputes, and the failure to deal with them appropriately, can lead to increased sickness absence which is not only likely to result in additional cost to an employer, but poor mental health has also been shown to have a negative impact on motivation and productivity, leading to a reduction in profitability. Conditions such as anxiety and depression may amount to a disability under the Equality Act 2010 if the condition has a substantial and long-term adverse effect on the individual’s ability to carry out normal day to day activities. Claims for disability discrimination are often complex and compensation is potentially unlimited, with tribunals being able to make an award for injury to feelings as well as loss of earnings.

Investment in effective management training and having adequate policies in place can help reduce the costs of dealing with conflict in the workplace and ensuring that employees feel confident in approaching their employer to discuss any concerns they may have. The report commissioned by ACAS estimates that the cost to an employer of dealing with formal action is likely to be three times higher than handling disputes on a more informal basis, such as through workplace mediation.

The full report can be read on the ACAS website.

To speak to us about your employment issues, whether to do with strategic business decisions or a particular issue involving an employee, contact our Employment Law team (0330 311 1950).